AUD/CAD Rises as Traders Await Key Canada Jobs Data

Key Moments

Cross Holds Above 0.9500 Ahead of Canadian Data

AUD/CAD stayed in positive territory during European trading on Friday. The pair hovered near 0.9520 after recovering from an earlier dip. However, the advance faced resistance as firmer Oil prices supported the Canadian Dollar.

Meanwhile, traders focused on upcoming Canadian labor market data and the January Ivey Purchasing Managers’ Index (PMI), both due later in the North American session.

Oil Prices Support CAD but Signal Weekly Loss

West Texas Intermediate (WTI) crude rose modestly after slipping in the previous session. Prices traded near $64.00 per barrel at the time of writing. Even so, WTI remained on pace for a weekly decline after six straight weeks of gains.

Markets also watched a planned meeting between the United States and Iran scheduled for later in the day. Expectations around the talks have driven the recent pullback in Oil prices.

Any clear progress could ease fears of military escalation and supply disruptions involving a major OPEC producer, which accounts for roughly one-third of global crude output.

Risk Sell-Off Hit AUD Before RBA Comments Sparked Rebound

AUD/CAD came under pressure earlier as the Australian Dollar weakened alongside global equities. A sharp drop in technology stocks drove the sell-off and hurt risk-sensitive assets.

Traders often view the AUD as a gauge of risk appetite. As a result, the tech-led decline weighed heavily on the currency.

Later, the Australian Dollar recovered after comments from Reserve Bank of Australia (RBA) Governor Michele Bullock. She said the board raised the Official Cash Rate because the economy faces tighter capacity limits than previously expected.

Bullock added that the RBA must slow demand growth unless supply expands more quickly.

These remarks reinforced expectations of further tightening, possibly as soon as May. As a result, the AUD strengthened and kept AUD/CAD above the 0.9500 level.

Canadian Dollar: Core Drivers and Macro Links

The article also highlighted several key factors that shape the Canadian Dollar’s performance.

Primary Drivers of the Canadian Dollar

Key drivers include Bank of Canada (BoC) interest rate decisions and Oil prices, as petroleum remains Canada’s top export. Economic growth, inflation trends, and the Trade Balance also play central roles.

Risk sentiment matters as well. Risk-on markets tend to support CAD, while risk-off conditions usually weigh on it. In addition, the health of the U.S. economy strongly influences CAD due to close trade ties.

Bank of Canada Policy and Its Impact

The BoC influences CAD mainly through its policy rate, which shapes borrowing costs across the economy. The central bank aims to keep inflation within a 1–3% target range.

Higher interest rates generally support CAD by attracting capital inflows. The BoC can also use quantitative easing or tightening to adjust credit conditions. Easing tends to weaken CAD, while tightening usually supports it.

Oil Prices and the Canadian Dollar

Oil prices remain a major driver of the Canadian Dollar. Rising prices often lift demand for CAD and improve the Trade Balance.

In contrast, falling Oil prices can pressure the currency by reducing export revenues.

Inflation and Economic Data as Market Catalysts

In an environment with fewer capital controls, higher inflation often prompts central banks to raise rates. Higher yields can attract foreign investment and boost demand for the local currency.

Other indicators also matter. GDP, PMIs, employment data, and consumer sentiment all shape expectations for growth and policy. Strong data can support CAD, while weak releases may drag it lower.